KPR Mill has rallied 8% to Rs 730 on the BSE in intra-day trade in otherwise weak market after the textile company said that its board will meet on Thursday to consider share buyback proposal.
“A meeting of board of directors of the Company is scheduled to be held on February 22, 2018 to consider inter alia, the proposal for Buy-back of the fully paid-up equity shares of the Company in accordance with the applicable provisions of the law,” KPR Mill on Saturday said in a regulatory filing.
The primary objective of a share buyback programme is to arrest the fall in the value of a stock by reducing the supply of the stock, which essentially pushes up the share price through a better P/E multiple. The other objective is to improve earnings per share (since the same dividend amount is now distributed among fewer shares).
In past eight months, the stock of KPR Mill had underperformed the market by falling 21% as compared to 9.5% rise in the S&P BSE Sensex till Friday.
At 11:08 AM; it was trading 6% higher at Rs 715 on BSE, as compared to 0.64% decline in the S&P BSE Sensex. A combined 149,380 equity shares changed hands on the counter on BSE and NSE so far.